Mangalore, Feb 27, 2008
Smaller cities and towns have the potential to become the boom towns of tomorrow. In the past 18 months, several tier II cities have witnessed a flurry of real estate activity. National level developers are picking up large land parcels, investors are rushing in to ride the upswing, and IT companies as well as BPOs are setting up base here to maintain cost efficiency.
Mangalore is growing faster than one can assume. The city is rated as India's second most growth centres as per world's best real estate consultant, UK based Knight Frank Group. Real estate is playing a vital role in the growth and India's topmost real estate developers have already camped in the city. The land price has hit all time high from no where to un-imaginable level.
Widespread economic activity and rampant urbanisation has led to the transformation of smaller towns and cities into high growth centres.
Several cities with population of less than or equal to one million are expected to emerge over the next few years. These numbers foretell the potential for widespread investment across these cities and bode well for residential and retail developments.
In the last two years, Mangalore has seen huge investment from 'outsiders'. Major names in the Indian as well as global market have shown keen interest in developing local real estate. Besides this, several township projects are in the pipeline.
Many say, Mangalore is going to be second Mumbai, city is going to be congested with pollution, traffic and population. Large number of outsiders will occupy the prime land. However, this may not be a negative aspect, as this could very well lead to further tremendous growth of Mangalore.
As per the Knight Frank report, which was brought out after an extensive survey, identifies India's 10 top most emerging growth centres. In Real Estate business and overall ranking, Mangalore stands second after Trivandrum. Raipur, Nashik, Bhopal, Rishikesh-Haridwar, Dehradun, Jalandar,Amritsir, Rudrapur are other emerging growth centres.
When daijiworld spoke to some of the prominent business persons, the key factor for such fast growth is understood to be the fastest growing air traffic after the introdcution of international flight service. The well placed New Mangalore Port is another factor for this rapid growth.
Here is the excerpts from Knight Frank report, quarter 4, 2007. The details will surely help several investors spread across the world, who are keen to invest in Mangalore.
Mangalore - Overview
Mangalore (Mangaluru), the district headquarters of Dakshina Kannada is a major port on the West Coast. It is a long stretch of beautiful green land in the south-western part of the Karnataka and has a thriving export/import industry. As a effect of the rapid expansion due to commercial, industrial and educational activities, the city is witnessing a change in physical and socio-economic development.
Mangalore has the presence of some of the industry leaders including Infosys, ONGC, MRPL, MCF, BASF KIOCL, Suzlon, Nagarjuna Power and the GMR group. The city is also known as the ‘Cradle of Indian Banking’ for having started the Corporation Bank, Karnataka Bank, Syndicate Bank, Canara Bank and Vijaya Bank. This is further enhanced by an excellent industrial climate and government support through local presence of Software Technology Parks of India (STPI), The Karnataka Industrial Areas Development Board (KIADB) and Science and Technology Entrepreneurship Parks (STEP).
The growth of the city is restricted towards the west due to the long coastline. Hampankatta Circle is the central area of the city and now the city is growing towards the east along the Mumbai-Kerala highway (NH-17). The city also extends till the New Mangalore Port in the northern direction and towards the south, crossing the Netravati River till Konaje.
The coastal city of Mangalore has undergone a sea change in the last three years. Some of the factors contributing to this tremendous growth are the proposed Coastal Special Economic Zone (C-SEZ) where ONGC will invest Rs. 250 billion in the next five years and the development of 3 IT-SEZs at Mudipu, Ganjimutt and Thumbe. Commencement of international flights has further fuelled the real estate prospects of the city.
Prime residential pockets are Falnir, Balmatta and Bejai. These locations have easy access and close proximity to traditional markets like Hampankatta and KS Rao Road. Residential areas like Kadri, Vas Lane, and Bendoor started developing due to scarcity of land in the core city and now from the mid-end residential pockets. Locations along the NH-17 like Kadri, Derebail and Kulur are the fastest to develop. Lately, the northern and eastern corridors of the city have been witnessing substantial real estate activity. Townships like Mary Hill, Land Links, and Blueberry Hills are coming up on Airport road. Other areas where townships are being planned include Kulur, Kannuru and Neermarga.
The Karnataka government had stopped issuing new approvals for construction projects in 2006 that resulted in delaying many projects. Owing to this, a minimal residential supply of 0.84 mn. Sq. ft. will enter the market by 2008. Bangalore based Purvankara Group plans to develop a 40 acre township near Bondel in the city’s outskirts, while the Raheja Group is developing a 100-acre township in Kulai in north Mangalore. Local developer Mohtisham is planning a 250-acre township at Kannur. The completion of the proposed township projects and other projects approved this year would result to an addition of approximately 3 mn. Sq. ft. of quality residential space by the end of 2009-10.
The central locations like Hampankantta and surrounding areas include both office space and retail space with the ground floor supporting retail outlets and the upper floors having office space. The 200 acre Export Promition Park at Ganjimutt is near completion. Satyam and Wipro have been allotted land here. There is severe dearth of land as the IT SEZ near Konaje is also fully allotted with infosys taking 311 acres of the total 500 acres. Nitesh Estates of Bangalore is coming up with an IT-SEZ at Ganjimutt with 2 mn.sq.ft. of built-up area. Another IT-ZEZ of 4 mn.sq.ft. is being developed by the BA Group at Thumbay. Non-IT office supply is limited with approx 0.32 mn. Sq.ft. being delivered the end of 2009-10.
Currently, only two malls are operational in the city and six more are at various stages of construction. Major upcoming malls are City Centre (550,000 Sq. ft.) and Excel Mall (81,000 Sq. ft.) developed by Mohitsham and Mischief Mall (81,000 sq.ft.) at KS Rao Road developed by Bhandary Associates. Prestige group is planning to come up with forum mall at MG Road. Mangalore will witness a retail supply of 1.6 mn. sq.ft. by 2009-10.
Hospitality sector is yet to establish in this city. Currently, there are only three major hotels in the 3-star category. With tourism and IT sectors gaining importance, leading hospitality brands like Hilton, Intercontinental and Leela have acquired space for setting up 5-star category hotels in and around Mangalore.
Rental and Capital Values
Residential property prices vary from Rs. 2,500-3,000/sq.ft. depending on the location, type of builder, specification and additional amenities offered. At present, demand is exceeding supply but the entry of new players is expected to increase the supply level. Demand for villas and premium apartments exist but limited to certain locations only. Capital values prime residential locations of Falnir and Balmatta range from Rs. 2,500-3,000/sq.ft. These locations have witnessed an appreciation of 125% in the last two years. Upcoming residential locations along Airport Road have capital values in the range of Rs. 2,500-2,900/- sq.ft.
MG Road and Hampankatta Circle, which cater primarily to government offices, financial institutions and to small corporate offices, lacks; Grade-A developments. The rental values for office space on MG Road, and KS Rao Road vary between Rs. 35-45 sq.ft. per month.
Most of the upcoming projects at MG Road and Navbharath Circle are mixed use developments. The capital values for office space in these projects are in the range of Rs. 4,000-10,000/sq.ft. The upcoming malls at KS Rao Road are quoting rentals in the range of Rs. 55-90/ sq.ft. per month.
The real estate of Mangalore is all set to meet the demands of its international clients wanting to establish their offices in the city in order to leverage the opportunity presented by lower costs, quality manpower pool and improving business conditions. The Mangalore Corniche project, a ring road integrating unique waterfront developments from Ullal Bridge to Kannur is expected to commence soon and will be the first of its kind in the state. This 31 km. promenade flanked by the sea is likely to be a star attraction in future.
The coastal city offers great competitive edge to the investors through low cost of real estate and manpower. Rapidly improving infrastructure, widening of national highways and the growth in the IT/ITES sector are factors contributing to the boom of real estate in and around Mangalore. The city also has the advantage of good connectivity by air, rail, road, and sea. The region is expected to have a robust growth due to increased business activities, pilgrimage and health tourism.